bitcoin approached a fair price amid UST collapse

Bitcoin was down 10% to its fair price with a 17-month low. This was against the backdrop of the UST steiblocoin crash and related turbulence, according to a report by analysts at Glassnode.

Last week was historic for #Bitcoin, as $LUNA hyper-inflated, $UST failed, forcing the sale of $80k $BTC

Next, the $USDT peg came under pressure for 24hrs, creating $5B in losses, and a near miss with the Realized Price

Read our full break-down analysis👇https://t.co/nYnG04dfDR

– glassnode (@glassnode) May 16, 2022

Full use of reserves LFG of 80,394 BTC did not stop the collapse of the UST-LUNA ecosystem, TVL At the time of the report formation, the first asset was stabilizing at $0.125, while the second was down 99.9998% of ATH, to $0.0002.

Data: Glassnode.

The graph below illustrates the sharp increase in LUNA supply (from 343 million to 6.53 trillion or 99,263,840% in annualized rates; logarithmic scale) against a maturity of 7.5 billion UST or 40% of supply (linear scale).

Because of such dramatic changes, the Terra network validators restarted it twice.

Data: Glassnode.

LFG emptied its $3.275 billion worth of bitcoin reserves in 21.5 hours from May 9-10 in three tranches – 22,189 BTC, 30,000 BTC and 28,205 BTC. The first two went to Gemini via OTC platforms, while the last went directly to Binance.

Data: Glassnode.

On May 16, the organization reported that only 313 BTC remained in its reserves. LFG’s share (80,394 BTC) was decisive in total coin inflows to exchange balances during this period (~88,000 BTC).

“Events. [коллапс UST] caused a ‘contagion’ effect and panic.”specialists conclude.

On May 14, there was a 32,000 BTC decline in exchange balances, which coincided with bitcoin’s return to above $30,000.

Data: Glassnode.

The decoupling of UST from the U.S. dollar has put pressure on the USDT systemically important stablecoin exchange rate. It hit a low of $0.9565 before rebounding from the resulting discount.

During this time, other assets in this category – BUSD, DAI and USDC – traded at a 1-2% premium.

The latter’s total market value rose by $2.64 billion. Analysts attributed this phenomenon to a desire to secure funds from “contagion” and allowed that USDC was becoming the “preferred” stablcoin.

Experts also pointed to a 24.4% ($2.07 billion) decline in DAI’s capitalization, which was partly influenced by liquidations of collateralized assets. DAI’s peg to $1 has remained stable, they added.

Data: Glassnode.

On May 12, the daily Tether-to-fiat conversion volume reached $2 trillion.

Tether Continues to Honour All Redemptions from Verified Customers During Market Volatility, On Track To Process 2bn Today https://t.co/p1AugHb9Gn

– Tether (@Tether_to) May 12, 2022

For the week, the figure was a record $7.485 billion for the sector. USDT’s total capitalization dropped to $75.75 billion.

Data: Glassnode.

To stabilize UST, LFG went to sell digital gold below its purchase price. The organization’s net realized loss was $703.7 million, and bitcoin investors’ total for the two days was $2.5 billion (one of the largest capitulations in history).

LFG’s loss figure above does not take into account the additional losses from the BTC to UST exchange and the hyperinflation of LUNA.

Data: Glassnode.

The pressure of problems with UST and LUNA has brought bitcoin’s exchange rate down to its realized price. Before this metric gave reliable signals about formation of the bottom, when the indicator exceeded the level of quotations. Last week the first indicator was $23,940, the second ($26,500) was 9.5% higher.

Data: Glassnode.

Recall that Robert Kiyosaki, author of the best-selling book “Rich Dad, Poor Dad,” called the bitcoin crash “great news” and predicted the cryptocurrency would test the $17,000 level.

Earlier, Peter Schiff, a prominent gold supporter and critic of the first cryptocurrency, thought it was “very likely” that quotations would plummet to $10,000.